33 Pages Posted: 2 Jun 2003
This paper examines the holdings of the Delaware courts that a control premium must be added to the market value of shares in freeze-out transactions. It finds this result is not required by prior Delaware law. We argue that there is no control premium absent a current transaction in control, and that assumptions of control premia in freeze-outs are simply speculation. Awarding control premia provides a windfall gain for public shareholders, and is contrary to the treatment of public shareholders who receive publicly traded shares in other mergers.
JEL Classification: G34, K22
Suggested Citation: Suggested Citation
Carney, William J. and Heimendinger, Mark, Appraising the Non-Existent: The Delaware Courts' Struggle with Control Premiums. University of Pennsylvania Law Review, Vol. 152, 2003. Available at SSRN: https://ssrn.com/abstract=399762 or http://dx.doi.org/10.2139/ssrn.399762